Trading Plan for 6/8
Thursday’s pre-open surge seemed… more euphoric than fantastic. The knee-jerk reaction to China’s rate cut was overly-optimistic. I likened it before the open to the market’s peak on Bin Laden’s killing. Its reaction was retraced entirely, but not yet rejected.
Pattern points… (Setups and technicals)[pay]
I’m assuming the pre-open swell of price action is why SEP futures traded relatively thinly, compared to prior front-month rollovers. JUN opened a lot of new positions before the open that otherwise would have been opened in SEP intraday.
Those are weak-handed buyers. So, much of Thursday’s session’s selling pressure might have been selling JUN without rolling forward to SEP. Awkward.
Will Friday’s price action simply pick-up where Thursday’s close left off, rejecting all of the gains above Wednesday’s mid-day high? Wednesday’s close above 1305.00 basis Sep (1312.00 basis Jun) had put into play 1311.00-1312.00 (1318.00-1319.00 Jun). Although exceeded intraday, its resistance held through Thursday’s close, thanks to the late 10-point plunge. Extending down through 1302.00 (1309.00 Jun) could still signal momentum reversing down.
Or, will Friday’s price action try to duplicate Thursday’s initial rally, whether or not the second effort gains more traction? Gaps up above prior highs tend to be filled, such as Thursday’s 1322.25 (1328.75 Jun) opening print. While 1302.00 (1309.00 Jun) below is likely to be tested, it’s not required, so it wouldn’t be “unfinished business below” that prevents a rally — its test could even be neutralized overnight and recovered before Friday’s open.
Thursday’s high signaled a peak by only probing 1322.00-1324.00 (1329.00-1331.00). Its retest Friday could be more thorough, and still not be bullish if not recovered through a relevant timing window. But few attractions above could be expected to absorb an early bias-down that trends down through the morning.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Start making plans now for Saturday’s Strategy Session. It starts at 9:30am ET, linked from the blog’s sidebar. [/pay]
Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.